USDNOK Breaks Critical Support - USDSEK Retreats at Alarming Rate
NORDIC FX, NOK, SEK WEEKLY OUTLOOK
- USDNOK, USDSEK retreating at alarming rates
- Greenback weakness fueling fall – more ahead?
- Fed rate expectations fueling recent USD selloff
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NORWEGIAN KRONE TECHNICAL ANALYSIS
After temporarily breaking below support, USDNOK recovered, though the respite was short lived after US Dollar weakness fueled by rising Fed rate cut expectations sent the pair lower. USDNOK is now trading in the upward-sloping support range (red parallel channel) and below the lower lip of the 8.6937-8.7883 range (yellow lines).
USDNOK Tests Key Support Levels
While it is largely expected that rising support will hold, a short-term retreat for the pair is not out of the question. In April, the pair came dangerously close to breaking below the 15-month support, only narrowly avoiding breaking below it. While the dominant uptrend will likely continue, a short-term retreat may be in the cards. Long traders may experience some growing pains as the pair continue to mature throughout 2019.
USDNOK – Daily Chart
SWEDISH KRONA TECHNICAL ANALYSIS
After trading consistently at a 17-year high, USDSEK has been on a downward decline and has shaved off over two percent. The culprit appears to be prevailing weakness in the US Dollar as market participants price in a higher-than-expected chance that the Fed will cut rates. Prior to the rapid descent, the pair stalled in the 9.5323-9.5767 (red dotted lines) range before throwing in the towel and dropping to 9.43.
USDSEK – Daily Chart
It is unlikely that USDSEK will reach as low as 9.3110 – that psychological floor will not likely be tested again this year. Assuming the fundamental outlook persists – or worsens – a premium will be put on liquidity over risk and that will likely cause USDSEK to continue along its broad upward-trajectory. The current setback will not likely hold, and in my view is nothing more than a temporary lull in the USD’s appeal.
Since January 2018, USDSEK has experienced numerous setbacks before it recovered and resumed its upward trajectory. The temporary retreat for the pair may be a repeat of this. Traders will likely show greater worry if USDSEK tests or comes close to the 18-month rising support (blue parallel channel).
USDSEK Upward Trajectory Remains Strong
SWEDISH KRONA, NORWEGIAN KRONE TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.